1

CHAPTER -I

INTRODUCTION

1.1 Background of the study

The word “Bank” is derived from Italian word “Banco” which means a bench. In the past, the
ancestors of modern banking system that was merchants, goldsmith and money lenders used
to perform the monetary tasks sitting on the bench not in the market. So, “Banco” was used
to denote monetary transactions.

Generally the bank refers to those institution which are established under law for dealing
with monetary transactions. It means those institutions are treated as banks which accepts the
deposit of public and grant loan to the needy person or businessmen or industrialist against
security deposits. A bank can generate revenue in a variety of different ways including
interests, transaction fees and financial advice. The main method via charging interest on
capital it lends out to customers. The bank profits from the difference between level of
interest it pays for deposit and other sources of funds and level of interest it charges in its
lending activities. Besides this, bank is engaged in different types of activities such as
exchange currency, joint venture, underwriting, bank guarantee, discounting bills etc.

Different economists have given definitions of bank. Definitions given by popular

economists are given below:

According to Dr. H.L. Hart, “A bank is one who, in the ordinary course of his business,
receives money which he pays by honoring cheque of person of person from whom or whose
account receives,”

According to Kinsley, “ Bank is an establishment to individuals, such advances of money as

may be required and safely made and to which individuals entrust money when not required
by them for use.”

According to Bank & Financial Institution Act, 2063 “ Bank means a corporate body
incorporated to carry on financial transactions as referred to in Sub-section (1) of section 47.
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1.2 Profile of Century Bank Ltd

Commercial Banks are those financial institutions who hold deposit of many persons,
government establishments and business units and make fund available through their lending
and investment to individual, borrower, and government and business units. Commercial
Banks, thus, are the heart of financial system. They are one of the major financial
intermediaries whose primary functions is the transfer of fund from savers to users.
According to American Institution of Banking, “ Commercial bank is a corporation, which
accepts demand deposit subject to check and make short term loan to business enterprise
regarding the scope of its other services. In the Nepalese context “ A commercial Bank is one
which exchanges money and deposit money, accepts deposits, grants loans and performs
commercial banking functions.

Century commercial bank limited (CCBL) is a national level commercial bank established on
January 23, 2011 with the objectives of providing simplified banking services by taking
advantages of innovation in information and communication technology CCBL aims ton
extends its reach to the unbanked population of the country and country and driven by the
mission of “ saral banking sabaiko lagi” ( simplified banking for all).

The bank has a network of 109 branches, 8 extension counters, 13 branches banking and 62
ATMs across the country and offers a wide range of banking products in deposits, lending
and other value added services such as internet/ mobile banking, remittance and branches
banking etc. The bank’s team comprises of more than 900 staffs and caters to more than
500000 customers. In the progressive strategy, the bank is focused on implanting sustainable
business, practices and delivery consistent growth that is sustainable and profitable to all its
stakeholders.

1.3 Objectives of the Study

i. To find out the resource and uses of fund with its utilization.
ii. To analyze the deposit mobilized by the public and private sector commercial banks
for a period of five years.
iii. To throw light upon the broad typology of deposit products offered by the
commercial banks.
iv. To find out the relative importance between time deposit and demand deposits
mobilized by commercial banks aggregate terms over a period.
v. To ascertain the primary factors that attract the depositors to prefer for a particular
bank over others for staking their services and carry different deposit related
transactions.
vi. To draw briefly appropriate conclusions and make suitable recommendation for
improving the performance of commercial banks in the area of deposit mobilization.
vii. To study the pattern and acceptance of deposits.
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viii. To know which deposit scheme is really performing well.

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1.4 Rationale of the study

Fund mobilization activities of bank greatly effects the growth and earnings of banks.
Optimum utilization of fund makes better impacts on the economy of the nation. Fund
mobilization activities must consider customer, national and government as well as its
shareholder interests. Significance of the fund mobilization can be written as the following
manner.

 From the study of Fund mobilizing policy, about bank, shareholders and companies
would get information related to the fund mobilizing scheme of the bank and they
may knowhow banks are mobilizing their fund and resources.
 The study of fund mobilizing policy would provide information to the management of
the bank that would be helpful to take corrective action.
 This study will serve to be a guide to the management of banks, financial institutions,
financial institutions, related parties, shareholders, general public ( customer,
depositors and creditors).

1.5 Review of Literature

When the topic is finalized, the related available materials like as previous research, article or
published book, previous report in the related field, journals, government publications,
business report like annual report of the banks have to be reviewed. This chapter has been
divided into two main sections. The first section of the chapter implores with conceptual
framework, which covers the concept of basic terms used in the study. And second section
implores the review of relevant studies, which includes the review research articles published
in international and national journals.

The review of literature guides the research for getting better understanding of methodology
used, limitations of various available estimation procedures and data base and lucid
interpretation and reconciliation of the conflicting results. Besides this, the researcher can
take advantages of knowledge of other researchers simply through the medium of their
published works.

1.5.1 Conceptual Review

Theory is a set of inter-related proposition that explains the nature of phenomena under
the study. It is an integrated body of definitions, assumptions and general proposition
relating. To subject matter of investigations from which a set of specific & testable
hypothesis can be deducted logically.

Research must be based on objectives evidence and supported by theory can appropriate
theory to guide the research may be identified by reviewing, academic literature content
in books, journals etc. It helps to undertake research in the systematic way and research
helps to improve in the existing theory or develop new theory. Theory is important for
researcher to recognize the value of theory.
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Fund Mobilizing Procedure of Commercial Banks

Commercial banks are those banks, which perform all kinds of banking function such as
grant loan, deposits of money from the public, discounting bills, repayable loan on
demand and withdraw by cheque, draft and other functions on behalf of customers.
Moreover, commercial banks also provided technical and administration assistances to
the industries trade and business entrepreneurs sectors. Establishment of commercial
banks contributes significant role in the formation and mobilization of internal capital &
development efforts. They furnish necessary capital needed for trade and commerce for
mobilizing the dispersed saving of the individuals and institution.

1. Sources of fund
In the economics activities there are so many sources of fund. In these sources, issuing
share and borrowing loan from different sectors are the major sources. The sources of
funds can be categorized in two ways.

A. Equity Capital of Banks

i. Ordinary Share
Ordinary Shares are the bank’s strong and reliable sources of fund. Bank’s
promoters issue ordinary shares to the public in fixed number. Banks collect the
fund by 7 selling fixed ordinary shares to the public by adopting fixed rules and
regulation. These public becomes shareholders after purchasing the issued shares.

ii. Preference Share

It is a kind of share which receive fixed dividend and after liquidation money
before ordinary share. But in Nepal, bank cannot issue preference share. But, in
some situation it can issue preference share by taking permission from NRB.

iii. Bonus share

Company issue the extra share to the shareholder from the saving from profit and
reserve fund by capitalizing these funds is known as bonus share. Banks issue
shares to shareholders instead of banks amount. From this share, banks collect
some share of funds.

iv. Retained Earning

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Banks earn profit by investing the fund in different sector through the principles
of profit earning. Banks invest their fund in productive or profitable industries and
business. Bank earns some amount from these investment.

v. Reserve fund
Banks separates some share of capital in reserve funds in the time of banking
activities. The reserve funds size based on banks earning and rules and
regulations. Banks must separate some share of amount from profit in reserve
fund. Banks have been earning by investing the reserve funds in liquid sector.

vi. Undistributed Dividend

Banks does not distribute all profit to the shareholders. Banks invest some amount
from profit by not distributing to shareholders. By this, the invested profit makes
sources funds to the banks.

vii. Borrowed Fund of Bank

Banks collects the fund from another source expect owned funds. Another sources
is borrowing from different sector. These types of funds collect borrowing and
debt capital.

viii. Selling of debenture

Debenture means a “ Rinpatra” which is issued by company by keeping or not
keeping assets securities for collection of funds. If banks needs a fund, it can
collect capital by issuing debenture.
ix. Deposits
The banks perform two-fold functions, i.e. the receipt of the deposits and granting
the loans. The bank borrow money by accepting different types of deposits. The
bank attract the deposits from the public. The bank not only undertakes to take
care of the deposits but also agrees to honor the demands of the depositors for
withdraw of money from the deposits. Deposits accepted by the bank are different
types. They are:

 Current Deposit

It is also known as demand deposit. A customer can open account with a

bank by making an initial of NRs. 100. Any amount may be deposited in
this account. The bank makes small charge on the customer having current
deposit account.

 Saving Deposit

In this deposit, there are restrictions on the maximum amount that can be
deposited also withdrawals from the account. The bank may not permit
more than one or two withdrawals during a week.
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 Fixed Deposit

A fixed deposit is one where a customer is required to keep a fixed amount

with the bank for specific periods. He is not allowed to withdraw amount
before expiry of the period. The rate of interest is higher than on other
deposit account. During this period the bank is free to make use of this
money for granting loans and advances.

x. Loan from Central Bank

NRB is the central bank of Nepal. All banks should operate their banking
activities by maintaining the rules and regulation directed by the NRB. In the time
of necessity, NRB provides the loans for the banks. The loan granted by the
central bank is a bank capital.

xi. Loan from Financial Institutions

Financial institutions also provided loan for the banks. Bank can receive loans
from financial institutions in the form of borrowing. The loan granted by the
financial institutions is also a bank capital.

xii. Loan from Commercial Banks

If banks need money, it receives money from other commercial bank also in the
form of borrowing. Banks fulfill the need of cash by taking loan from other banks.
It is also the types of bank capital.

i. Mobilization of Funds

 Liquid Funds
 Investment
 Loan and Advances
 Fixed Assets
 Administrative and Miscellaneous Expenses

1.5.2 Review of Previous Work

The structural ratio of commercial banks show that banks invest on the average 75
percent of their total deposit on the government securities and the shares. The analysis
of resources position of commercial banks should quit high percentage of deposit as
cash reserve. Return ratio of all the banks of the time foreign banks have higher return
as well as higher risk than Nepalese banks. The debt-equity ratios of commercial
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banks are more than 100 percent in most of the management achievement foreign
banks have a comparatively higher total management achievement index.

1.5.3 Research Gap

There are various researcher conduct on lending practice, credit policy, financial
performance and credit management of various commercial banks. Some of there
searchers have done the financial performance between two or three different
commercial bank. In order to perform those analysis researchers have used various
ratio analysis. The past researches in measuring financial performance of bank have
been focused on the limited ratios, which are incapable of solving the problems. In
this research various ratio are systematically analyzed and generalized. Past
Researchers are not properly analyzed about fund mobilization bank and its impact on
the profitability. The ratios are not categorized according to nature.

1.6 Research Methodology

Research methodology is an main part of a research that includes various methods for
describing the activities done by the research. It is descriptive in nature which uses both
financial and statistical tool for analyzing and explaining a project. It includes
following process:

1.6.1 Research Design

The research approach for this study may be quantitative in nature as it explores the
associated the associated factor of the status of banks in terms of fund collection and
mobilization. Descriptive and analytical research design is approached for identify the factual
data that involve gathering of data that describes events and then organizes, tabulates, deposit
and describes the data collection that reduces the data to manageable form.

1.6.2 Population and Sample

In this research context, the population is the listed commercial banks of Nepal. There are
all together 27 commercial banks till the study period. Out of these 27 commercial banks, we
have one commercial bank CCBL. It is shown in the table.
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Table No. 1.1 List of Commercial Banks

S.N Name of the Operation Head Office Paid-Up
Commercial Banks Date (A.D) Capital (in
Cr)
1 Nepal Bank LTD 11/15/1937 Kathmandu 804.27
2 Rastriya Banijya Bank 01/23/1996 Kathmandu 858.90
Ltd
3 Agriculture 01/21/1968 Kathmandu 1252.04
Development Bank
4 Nabil Bank Ltd. 12/07/1984 Kathmandu 804.32
5 Nepal Investment Bank 09/03/1986 Kathmandu 924.04
Ltd.
6 Standard Chartered 02/28/1987 Kathmandu 400.57
Bank Nepal Ltd.
7 Himalayan Bank Ltd. 01/18/1993 Kathmandu 649.16
8 Nepal SBI Bank Ltd. 07/07/1993 Kathmandu 697.18
9 Nepal Bangladesh 06/06/1994 Kathmandu 721.91
Bank Ltd
10 Everest Bank Ltd. 10/18/1994 Kathmandu 611.52
11 Kumari Bank Ltd. 03/04/1994 Kathmandu 596.95
12 Laxmi Bank Ltd. 03/04/2002 Kathmandu 747.24
13 Citizen International 4/20/2007 Kathmandu 802.92
Bank Ltd.
14 Prime Commercial 09/24/2007 Kathmandu 632.54
Bank Ltd.
15 Sunrise Bank Ltd. 12/10/2007 Kathmandu 709.22
16 Global Ime Bank Ltd. 05/04/2010 Kathmandu 699.37
17 Mega Bank Ltd. 07/23/2010 Kathmandu 458.23
18 Century Commercial 10/03/2011 Kathmandu 546.06
Bank
19 Sanima Bank Ltd. 02/12/2012 Kathmandu 800.13
20 Machhapuchhre Bank 07/09/2012 Pokhara 737.45
Ltd.
21 NIC Asia Bank Ltd. 06/30/2013 Kathmandu 803.11
22 NMB Bank Ltd. 04/09/2014 Kathmandu 646.18
23 Prabhu Bank Ltd. 10/18/2015 Kathmandu 588.14
24 Siddhartha Bank Ltd. 7/21/2016 Kathmandu 682.61
25 Bank of Kathmandu 7/14/2016 Kathmandu 562.96
Ltd.
26 Civil Bank Ltd. 10/17/2016 Kathmandu 518.52
27 NCC Bank Ltd. 01/01/2017 Rupandehi 467.91
( Source: List of BFI’s Oct 2017)
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1.6.1 Sources of Data

In this study, we have collected all the data from the secondary sources. Data
collected
are based on the annual reports and websites of the related bank. Newspaper, articles,
journals, dissertations etc. are also viewed for the data collection. All the data are
quantitative data instead of qualitative data.

1.6.2 Data Collection Procedure and Processing

This study is more analytical and empirical. It covers quantitative methodology using
financial and statistical tools. The study is based on analytical and exploratory
research design. The study is mainly based on secondary data gathering from
respective annual reports of concerned banks especially from profit and loss account,
balance sheet and other publication. They are derived with the help of some financial
and statistical tools were adapted to evaluate the fund mobilization of commercial
banks viz. CCBL inconsideration not only to research about them but also to facilitate
among them. The study is mainly based on secondary data. In order to fulfill the
objectives of this research work, all the secondary data are compiled, processed and
tabulate time series form and processed by using SPSS facilities of computer for
statistical analysis as well as formula.

There are altogether 27 commercial banks are operating in Nepal. In this study one
commercial bank is to be taken for research work i.e.

1. Century Bank Ltd

This bank is compares as per fund mobilization procedure, that is adopting to
mobilize their collected funds as well as own funds.

1.6.3 Data Analysis Tools and Techniques

1.6.3.1 Financial Tools

Financial tools are used to identify the financial strength and weakness of the firm by
properly establishing relationships between the items of the balance sheets and the
profit and loss account. These are various types of financial tools. However, only
some of the financial tools are used in this study.

A. Liquidity Ratio

It is the ratio which helps to measure the ability of the firms to meet short term
obligations. It measures the speed of firms to convert the firm’s assets into cash to
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meet deposit withdraws and other current obligations. There are various types of
liquidity ratios through only some of them are used in this study as follows:

 Cash and bank balance to total deposit ratio

Cash and bank balance are the most liquid current assets of a firm, cash
and bank balance to total deposit ratio measures the percentage of most
liquid assets to pay depositors immediately. This ratio is computed
dividing the amount of cash and bank balance by the total deposits. It can
be presented as,

C/TDD=Cash and Bank Balance/Total Deposit

 Cash and bank to current deposit ratio

This ratio is calculated dividing cash and bank balance by total current
deposit and can be calculated as,

C/TCD=Cash and Bank Balance /Current Deposit

B. Assets Management Ratio

The assets management ratio measures how effectively the firm is managing its
assets. These ratios are designed to answer this question: Does the total amount of
each type of assets as reported on the balance sheet seem reasonable or not? If a
firm has excessive investment in assets then its capital costs will be unduly highly
and its stock price will suffer. In this study this ratio is used to indicate how
efficiently the selected banks have arranged and invested their limited resources.

 Loan and Advances to Total Deposit

This ratio is calculated to find out how successfully the selected banks are
utilizing their total collection or deposits on loan and advances for the
purpose of earning profit. Greater ratio shows the better utilization of total
deposits, which can be shown as,

Loans and Advances to TDD= Total Loans and Advances /Total Deposit

 Loans and Advances to Total Working Fund Ratio

This ratio indicates the ability of selected banks in terms of earning high
profit from loan and advances. Loan and advances to working fund ratio
can be obtained dividing loan and advances amount by total working fund.
That is formulized as:
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Loan and Advances to TWF Ratio= Total Loan and Advances/ Total
Working Fund

 Investment on Govt. Securities to Total Working Fund Ratio

Investment on government securities to working fund ratio shows how

much part of total investment is there on government securities in
percentage. It can be obtained by:

Invt.On Govt. sect. to TWF Ratio= Invt On Government Securities/ Total

Working Fund

C. Profitability Ratio

Profitability ratio shows the combined effects of liquidity, assets management and
debt on operation results. Profitability of the firm can be presented through the
following different ways:

 Return on Assets (ROA)

Return on assets is an indicator of how profitable a company is relative to

its total assets. ROA gives an idea as to how efficient management is at
assets to generate earnings. Sometimes this is also referred to as “ Return
on investment”, it can be calculated as:

ROA= NPAT/ Total Assets

 Return on Equity (ROE)

Return on Equity (ROE) is the amount of net income returned as a
percentage of shareholders equity. Return on equity measures a company’s
profitability by revealing how much profit a company generates with the
money shareholders has invested. It can be calculated as:

ROE= Net Income/ Total Equity

 Earning Per Share (EPS)

It reflects the earning power of a company. It makes easy to compare past

and present EPS of the company and compare with competitions. It is
calculated by dividing total earnings available to the common shareholders
by number of common shares outstanding. It is given as:

EPS= NPAT/N
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Where,
NPAT= Net Profit After Tax
N= No. of outstanding shares

 Dividend Per Share (DPS)

It gives financial soundness of the company. Only financially strong

companies can distribute dividend. It attracts investor to invest in share of
stocks and maintains goodwill. It is calculated as:

DPR= DPS/N

Where,
EPS=Earnings Per Share
N= No. of share outstanding

 Dividend Payout Ratio (DPR)

The ratio of distribution of earnings to the shareholders and total earnings

is dividend payout ratio. It is calculated as:

DPR= DPS/EPS

Where,
DPS= Dividend Per Share
EPS= Earnings Per Share

 P/E Earning Ratio (P/E Ratio)

It is the price of share the outsider is paying for each rupee reported by the
balance sheet of the banks. It is calculated as:

P/E Ratio = MV/EPS

Where,
MV= Market Value Per Share
EPS = Earning Per Share

 Non-Performing Loan Ratio

A non-performing loan (NPL) is the sum of borrowed money upon which

the debtor has not made his scheduled payment for at least 90 days. A
non-performing loan is either in default or close to being in default. Once
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a loan is nonperforming, the odds that it will be repaid in full are

considered to be substantially lower. It is the ratio of the non-performing
loans to total loans of the bank. It is calculated as:

NPL Ratio= Non performing loans/Total Loans

 Capital Adequacy Ratio

The capital adequacy ratio (CAR) is measure of a bank’s capital. It is

expressed as a percentage of a bank’s risk weighted credit exposer. Also
known as capital-to-risk weighted asset ratio (CRAR), it is used to protect
depositors and promote the stability and efficiency of financial system
around the world. Two types of capital are measured: tier one capital,
which can absorb losses without a bank required to cease trading, and tier
two capital, which can absorb losses in the event of a winding-up and so
provides a lesser degree of protection to depositors. It is calculated as:

CAR Ratio = Tier one capital + Tier two capital/ Risk weighted Asset

1.6.3.2 Statistical Tools

i. Arithmetic Mean

An average is a single value selected from a group of values to represent them

in same way, which is supposed to stand for whole group of which it is a pare,
as typical of all the values in the group.

Arithmetic mean of a given set of observation is their sum divided by the

number of observations. In general, if X1, X2, X3, ,……, Xn are the given
observations, then arithmetic mean usually denoted by X is given by;

X= X1+X2+X3+…+Xn / N

Where,
N= Number of observation

ii. Standard Deviation

It is the root of the variance standard deviation. Also known as “ Root mean
square deviation”. It is calculated as;
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iii. Coefficient of Variation

According to Prof. Karl Pearson, Coefficient of variation is the percentage
variation in mean, standard deviation being considered as the total variation in
the mean. It is one of the relative measures of dispersion that is useful in
comparing the amounts of variations in the data groups with different mean.
For comparing the variability of two distributions, we compute the coefficient
of variation for each distribution. A distribution with smaller CV is said to be
homogeneous or uniform or less variable than other, conversely a series with
greater CV is said to be more variable or heterogeneous than the other. It is
calculated as;

C.V = Mean / SD *100

1.7 Limitations of the Study

i. All the data collected are from secondary sources.

ii. The data for this study is quantitative data.
iii. The data collected are only for five years.
iv. Only some of the financial and statistical tools are used for analyzing
the data.
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CHAPTER – II

RESULTS AND FINDINGS

2.1 Presentation of Data

Presentation means the presentation of the collected data through table, figure etc.
Presentation is the process of understanding the study or the report and calculating the opinion.
An analysis of a data means the process where the statement or the report gets resolve by
breaking them into simple statement. Analysis means to find out something and give opinion
about the presented data. A number of financial ratios crucial in evaluating the paid-up capital
maintenance procedure of commercial banks have been calculated and analyzed in this chapter.

2.1.1 Cash and Bank Balance to Total Deposit

Cash and Bank balance to total deposit ratio measure the availability of a banks immediate funds
to meet its unanticipated calls on all types of deposits. A high ratio indicates the greater ability to
meet their deposits and vice versa.

Total Deposit Ratio (TDR) = Cash and Bank balance / Total Deposit

Table No. 2.1

Cash and Bank Balance to Total Deposit

Year Cash and bank Total Deposit Cash and bank

balance balance / Total
Deposit
2016 90074.43 11445.29 7.38
2017 34005072.96 13715.4 5.19
2018 109592.30 27957.22 3.92
2019 181112.41 34896.42 7.62
2020 313025.94 42415.44 7.87

From the above table, cash and bank balance to total deposit ratio of the bank followed a
fluctuating trend. It reveals that the cash and bank balance to total deposit ratios of the bank are
in fluctuating trend.

The bank has better position regarding the demand of its customer on their deposit at any time.
The high ratio indicates its ability but very high ratio shows the inefficiency. It has to pay more
interest on deposit.
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Figure No. 2.1 Cash and Bank balance to Total Deposit

0
2016 2017 2018 2019 2020

2.1.2 Cash and Bank Balance to Current Assets

Current and Bank Balance is the most liquidity from current assets. This ratio measures the
proportion of cash and bank balance held by CCBL out of total current assets.

Cash and Bank Balance to Current Assets Ratio = Cash and Bank Balance / Current Assets

Figure 4.2
Cash and Bank Balance to Current Assets Ratio (%)

Year Cash and Bank Current Assets Cash and Bank Balance /
Balance Current Assets
2016 90074.43 14718.04 6.12
2017 34005072.96 21600.58 4.17
2018 109592.32 21193.98 4.25
2019 181112.41 10329.63 8.72
2020 313025.94 85455.96 10.54

The above table can be further visualized in the figure.

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Figure No. 2.2 Cash and Bank Balance to Current Assets

12

10

0
2016 2017 2018 2019 2020

From the above table and figure it reveals that cash and bank to current assets ratio of CCBL is
in fluctuating trend. Similarly, high coefficient of variation indicates its ability but very high
ratio shows the inefficiency and more risk. To build up the strong position, the bank should
undertake the defending strategy to avoid the risks involved and to hold the strong position.

2.1.3 Investment on Government Securities to Current Assets Ratio

The major objectives of this ratio are to examine that portion of commercial banks current assets,
which is invested on various government securities issued by government. The government
securities do not give more return to investors than other investment sectors. But they are fully
secured investment. Commercial banks invest their excess fund on government securities for
diversification of investment.

This Ratio calculated as follows;

Investment on Government Securities = Investment Government Securities / Current Assets

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Table No. 4.3

Investment on Government Securities to Current Assets

Year Investment Government Current Assets Investment Government

Securities Securities / Current Assets
2016 265988.53 14718.04 13.69
2017 308870.80 21600.58 15.16
2018 1328527.09 21193.98 13.93
2019 1630709.70 10329.63 7.69
2020 1891304.46 8545.96 9.59

The above table can be further visualized in the figure below and analyzed below;

16

14

12

10

0
2016 2017 2018 2019 2020

The table shows that the bank has invested their funds to government securities through out the
periods. The bank followed fluctuating trend during the period. The investment in government
securities of CCBL shows that the funds of investment is not uniform, is the fiscal year 2017/
2016 has the highest ratio than other years.

2.1.4 Loan and Advances to Total Deposit

The loan and advances to total deposit can be dividing the total loan and advances by the total
deposit. The study of the sample bank is given below;
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Table No. 2.4

Loan and Advances to Total Deposit

Year Loan and Total Deposit Loan and Advances /

Advances Total Deposit
2016 784574.62 11445.29 68.55
2017 973519.09 13715.4 70.98
2018 1690013.94 27957.22 60.45
2019 2056097.06 34896.42 58.92
2020 2907578.41 42415.44 68.55

The above table can be further visualized in the following figure and analyzed below;

Figure No. 2.4 Loan and advances to Total Deposit

80

70

60

50

40

30

20

10

0
2016 2017 2018 2019 2020

The above table shows that the bank has mobilized their collected deposits in fluctuating trend as
compare to loan and advances during the study period. CCBL has mobilized 65.49% of its
collected deposit in loan and advances.

2.1.5 Total Investment to Total Deposit

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A commercial bank mobilizes its deposit by investing its funds in different securities issued by
government and other financial and non-financial companies. This ratio measures the extent to
which banks are able to mobilize their deposit on investment of various securities. A high ratio
indicates the success in mobilizing deposit in securities and vice-versa.

Total Investment to Total Deposit = Total Investment / Total Deposit

Table No. 2.5

Total Investment to Total Deposit Ratio (%)

Year Total Investment Total Deposit Total Investment /

Total Deposit
2016 265988.53 11445.29 23.24
2017 308870.80 13715.4 22.52
2018 1328527.09 27957.22 47.52
2019 1630709.70 34896.42 46.73
2020 1891304.46 42415.44 44.59

The above table can be further visualized in the figure below;

Figure No. 2.5 Total Investment to Total Deposit

50

45

40

35

30

25

20

15

10

0
2016 2017 2018 2019 2020
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The above table shows that the ratios of total investment to total investment to total deposit in
case of bank has followed up fluctuating trend during the period. The table and figure shows that
the relationship between portion of investment of its deposit.

2.1.6 Compounded Annual Growth Ratio of Total Deposit (in millions)

Table No. 2.6

Compounded Annual Growth Ratio of Total Deposit

Fiscal Year Deposit of CCBL

2019/ 2020 42415.44
2018/ 2019 34896.42
2017/ 2018 27957.22
2016/ 2017 13715.4
2015/ 2016 11445.29
Growth Rate (%) 13

The above figure can be further visualized by using the following chart;

Figure No. 2.6 Compounded Annual Growth Ratio of Total Deposit

45000

40000

35000

30000

25000

20000

15000

10000

5000

0
2016 2017 2018 2019 2020
 23

The table presented above shows that the deposits of the bank is in increasing trend during five
years of study period. The growth ratio of CCBL is 13%.

2.1.7 Compounded Annual Growth Ratio of Net Profit (in millions)

Table No. 2.1.7

Compounded Annual Growth Ratio of Net Profit

Fiscal Year CCBL OF Net Profit

2019/ 2020 254.99
2018/ 2019 247.77
2017/ 2018 316.37
2016/ 2017 391.74
2015/ 2016 464.74
Growth Rate (%) 12.75

The table above can be further visualized in the chart to understand the growth of net profit of
the sample bank.

Figure No. 2.7 Compounded Annual Growth Ratio of Net Profit

500

450

400

350

300

250

200

150

100

50

0
2016 2017 2018 2019 2020
 24

The above table represents the growth ratio of net profit of CCBL during five years study period.
It shows that the higher ratio growth is 12.75%.

2.2 Analysis of Results

Research which is concerned with subjective phenomena. The aim of qualitative research is to
get depth knowledge and explain the subject and issue rather than finding the solution. It details
with qualitative information like feeling, behaviors, attitudes, personality and satisfaction etc
which normally cannot be expressed in number or numeric value. Qualitative research is used in
social science research. Generally, it is conducted to understand the responses of people. It uses
survey & interview types of tools on conducting the research. The qualitative research intended
to quantity the actually happened social phenomena with an interpretation regarding how the
people involved, perceive and interpret their own experience. This philosophy is associated with
qualitative research. It believes that there is no single absolute truth but there are different truths
and relatives.

2.3 Findings of Results

Research prefers quantitative method and urges that reality is stable and can be observed and
phenomena should be isolated and that observation should be repeated. This philosophy is based
on the highly structure methodology to enable quantitative observation, evaluate the result with
the help of statistical methods and generalization. This sources is conducted considering to the
natural setting rather than perception and interpretation of people i.e it ignores the human
behavior, feeling, attitudes and perceptions. This is critical and objective method and the
researchers primary depend upon quantitatives data to follow the positivist’s approach.
 25

CHAPTER – III
SUMMARY AND CONCLUSION
3.1 Summary
The commercial banking system of the nation is important to the functioning of our
economy. The management of money in the bank is the main function that makes a profit
and maximum utilization of national resources. CCBL is a modern commercial bank with
modern facilities and proficient skills and lays paramount emphasis providing quality
service to all its clients. Bank is such types of institutions, which deal with money and
substitute for money and its most essential thing is good circulation of credit. The bank
mainly offers different services as functions i.e. acceptance of deposits, advancing of
loans, agency function, purchase and sale of foreign exchange, creation of credit etc. The
modern banking system follow the liquidity management, cash management and portfolio
management with related to the investment policy of bank.The source of fund and their
mobilization has been studied during this project by using Century Bank Ltd. The study
of the bank has been shown in this research project. The data of five years has been used
to analyze and compare the performance of the bank. The study is based on some
financial as well as some statistical analysis too. The major purpose of the study was to
find out the methods that the sample bank is using to collect their funds from the market
and the strategies that they use to mobilize those funds from the surplus unit to the deficit
unit. The investment of the CCBL seem to be fluctuating in the government securities.
The net profit of the Century bank is growing rapidly and efficiently without any losses
during any year of the study.The analysis clearly indicates that the CCBL is performing
better in the market because the trend of the growth of deposit is in increasing way. The
ratio of CCBL is related with investment policy of bank. So, its component is calculated
and measure. Statistical tools like arithmetic mean, standard deviation and coefficient of
variation are computed to evaluate and reach certain conclusion.
 26

3.2 Conclusion
Economic liberalization policy of the government has encouraged the establishment of
growth of the banks in the country with in short period of time. In a situation when the
existing financial institutions, especially government commercial banks were unable to
meet credit needs and perform other activities, the contribution joint venture commercial
banks have played pivotal role. However, the overall performance of JVBs is not
satisfactory.

Strengthening and the institutionalization of commercial bank are very important to have
a meaningful relationship between commercial banks and national development through
shift of the credit to the productive industrial sector. The liquidity position of sample
JVBs (CCBL) is satisfactory. Nepal CCBL has higher liquidity position. The coefficient
of correlation of deposit lending and investment of Nepal CCBL shows that it has better
position. The commercial banks have to prove that they can really contribute to the
national economy, are efficient and visible agencies for mobilization of saving and are
professionally managed and competent enough to ensure adequate rate of return on
investment and are strategically well planned.
 27

BIBLIOGRAPHY

Adhikari, R.K. (2013), Research Methodology, Kathmandu: Januka Publication

Bhalla, V.K., (1997) “ Investment Management”, Fourth Edition, New Delhi, S. Chand and
Company Ltd.
Annual Report (2016-2020), Kathmandu: Century Bank Ltd.
Key Financial Indicators of BFI’s ( Dec. 2020). Kathmandu: Nepal Rastra Bank
www.centurybankltd.com
www.nrb.org.np
www.investopedia.com
www.wikipedia.com
www.youtube.com
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Appendices

APPENDIX 1
Compounded Annual Growth Ratio of Total Deposit
( in millions)
Fiscal Year Deposit of CCBL
2019/ 2020 42415.44
2018/ 2019 34896.42
2017/ 2018 27957.22
2016/ 2017 13715.4
2015/ 2016 11445.29
[(Ending Price) / (Beginning Price(]^1/4 [42415.44/11445,29)^(1/4)]-1
-1
Growth Rate (%) 13

APPENDIX 2
Compounded Annual Growth Ratio of Net Profit

Fiscal Year CCBL

2019/ 2020 464.74
2018/ 2019 391.74
2017/ 2018 316.37
2016/ 2017 247.77
2015/ 2016 254.99
[( Ending Price) / (Beginning Price)]^1/4 [(464.74/ 254.99)^(1/4)]-1
-1
Growth Rate (%) 12.75